Stockman Slams Trump Administration's Budget Projections As "Fantasy"

Authored by Craig Wilson via The Daily Reckoning,

David Stockman joined Bloomberg Markets to discuss President Donald Trump’s latest budget projections. After the White House and current Office of Management and Budget director Mick Mulvaney released various statements on the budget proposal viability conversations already began within the GOP and Congress.

When prompted by host David Gura over his thoughts, even reflecting on former Treasury Secretary Summers comments that the budget is ludicrously optimistic, David Stockman did not mince words speaking on Washington.

“I think it is fantasy land. They have been kicking the can so long that the magnitude of the problem is almost insuperable. They just imagine options, they imagine policy mixes that have no chance in the world of happening.”

 

“Not only does this budget project all of this GDP, which can’t happen, it also says we’re going to have what they’ve laid out as a $7.5 trillion gross tax cut over ten years. They’ve identified 15% on the corporate rate, 15% on the pass through and doubled the standard deduction along with all of the rest of the proposals. Yet they say they’re going to pay for it with 100% offset so that there’s no revenue loss.”

During the conversation the Bloomberg host then inserted that the budget offers a “double count” with reference to the math completed by the Administration. Stockman remarked, “Sure, I’m all for a broader base, lower rates – that’s what Reagan did in 1986. But how are you going to come with $7.5 trillion of offsets, when you have the K-Street lobbyists lined up from one end of the swamp to the other. The big dollars are really beyond reach.”

“The biggest loophole you could close is the health exclusion – that’s $200 billion a year. The House Republicans backed out on that during the Obamacare repeal. The next biggest one is $180 billion which is pensions and IRA’s. Do you think they’re going to take pensions and IRA’s away?”

 

“The third biggest one is capital gains and dividends treated on a preferential basis. When you put all the Wall Street lobbyists, along with the rest of them, on the case they’re not going to do that either.”

 

“My point is, they pretend to have a tax cut that they haven’t paid for that produces GDP that’s out of this world beyond what’s possible. They end up with budget numbers that are so unrealistic and such a complete fantasy that they might as well not even bother.”

Stockman then urged all that together with the fact that, “they pretend that you can raise defense, veteran spending and have a trillion dollar infrastructure program. That you can ring-fence social security and medicare which is $1.8 trillion, not cutting them a dime.”

“Essentially, they believe you can take $500 billion of a $4 trillion budget and cut the hell out of that little corner and leave all the rest to either grow or stay the same while believing it adds up. It doesn’t.”

Comments

roadhazard nmewn Thu, 06/15/2017 - 15:45 Permalink

At this point in Obamas Presidency Hannity was ranting about the choice of mustard Obama picked for his hamburger. I'm serious.http://www.bing.com/videos/search?q=Hannity+rants+about+Obamas+mustard&&view=detail&mid=C10F99923E86A4F270ABC10F99923E86A4F270AB&FORM=VRDGARAnd this just in, Faux Nooze can no longer keep a straight face and has dropped, "Fair and Balanced" as their motto.

In reply to by nmewn

marathonman Looney Thu, 06/15/2017 - 15:16 Permalink

The Fed will monetize the new debt.  The Ponzi must continue... or maybe the Fed has determined that tanking the economy on Donald's head is the best course of action.  Turn the Congress to Democrat control in 2018 due to crappy economic results.  'Alleged' Russian election interference won't have anything on the Fed when theyre done with Trump.

In reply to by Looney

Laddie SenselessPanic Thu, 06/15/2017 - 15:12 Permalink

Stockman has been pretty reasonable as an economist who had been in Reagan administration.
As ZH had documented over the years the entire economic system of the USSA has been a Ponzi scheme. Sooner or later it will come to a halt. It must, fundamental economic principles can only be manipulated for a limited time.

Stanley Fischer: A Dual U.S./Israeli Citizen and Pro-Israel Activist as Vice-Chair of the Fed January 5, 2014 by Kevin MacDonald PhD emeritus professor of psychology at California State University - Long Beach

In reply to by SenselessPanic

slightlyskeptical 847328_3527 Thu, 06/15/2017 - 17:23 Permalink

Only sane way to fix it, is to fix the money system by abolishing debt based money and fractional reserve banking, eliminate all income taxation, and let the government simply print what they need to operate within certian caps. Fund it all with a gold based system with a fixed price for gold and based on a unit of gold in exchange for a unit of currency. As number of currency units expand, the fixed price of gold would expand as well. 

In reply to by 847328_3527

847328_3527 Thu, 06/15/2017 - 15:14 Permalink

I see tons of houses for sale these days. Three years ago you had to wait 6 months or more for a house. So many unemployed that not even zero down loans can help the RE market anymore. 8 years of Soweeto-nomics has consequences. No wonder hois pet, the wookie has dat "feeling of hopelessness"....it's because her hateful husband created it!

shaggythelma Thu, 06/15/2017 - 15:16 Permalink

Talk about someone who served at the govenment teet!  David Stockman is a relic of a time long gone.  All of his private efforts since 2000 have ended in bankruptcy or litigation.  His success before then was because of cushy post government jobs at firms that had substantial government contracts.  

brushhog Thu, 06/15/2017 - 15:17 Permalink

Alot of companies failed under Stockman's leadership. He was found guilty of some financial crimes while serving as the CEO. Now he makes a living as a doom forecaster.

shovelhead Thu, 06/15/2017 - 15:26 Permalink

Stockman, as usual, is right.Why? Because he knows (and uses) REAL arithmetic.Still, if Trump can eliminate some of this idiotic FedGov., it will feel a little bit  better when it all blows up. What happens after that is anyone's guess. I guess the stuff you hold in your hand will be fine while the unicorn farts vaporize back to where they came from.Somebody's holding an awful lot of unicorn farts and thinking it's wealth.It ain't.

WTFUD Thu, 06/15/2017 - 15:37 Permalink

Been dazed & confused for so long it's not true
Wanted a swamp drainer, never bargained for you
Lots of people talk few of them know
Soul of the Money-Changers was created below . . .

ZEP

Mzhen Thu, 06/15/2017 - 15:38 Permalink

Stockman was a failure in the Reagan administration.  It was obvious at the time that his policies and ideas didn't make sense.  He doesn't really merit a resurgence of his career.

slightlyskeptical Thu, 06/15/2017 - 15:48 Permalink

You want to make America great again?It all starts with the money system, can't really change much until you change that.We need to print our own money, and abandon the debt based money system along with the fractional reserve banking system.Let the government print their budget and end all income taxation. Puts caps in on how much budget can increase each year. With the elimination of fractional reserve banking the economy is going to need considerable money supply increases and letting Govt print the budget, covers that need.The question i have for zero - hedgers is, are you willing to let the government help those in need with basic sustenance and health care, if there are no taxes for you to pay as a result?

silverer Thu, 06/15/2017 - 15:56 Permalink

Well hell, they've been stacking up this crap since about 1983. Both sides of the aisle. Of course it can't be fixed. Congress through policy directed the entire nation off a cliff. And off the cliff you shall go.

johnjkiii Thu, 06/15/2017 - 16:03 Permalink

Stockman is right on the fundamentals but he has been saying this since the S&P was 1200 and is becoming a crank. I'm no bull but I know bullshit when I smell it. Opinions are worth what you pay for them but 99% are overpriced. The object of the game is to make money and if you listened to his crap for 6 or 7 years you mssed a 100% move. Follow the cash! It hasn't paid a moments notice to David.